Senior Citizen Faced Rs. 22.18 Lakh Cash Deposit Addition; ITAT Condoned 667-Day Delay and Granted Fresh Appeal Hearing

The Income Tax Appellate Tribunal (ITAT), Bangalore Bench, has come to the rescue of taxpayer Arun Machaiah Cheppudira Somaiah by restoring his appeal to the CIT(A) for fresh consideration.

The appeal before the Tribunal was filed 667 days late. The taxpayer filed an application giving reasons for delay which was supported by an affidavit. The Tribunal found that the explanation was credible and that the taxpayer had not been advantaged by the late filing of the appeal. The Tribunal relying on the principle laid down by the Supreme Court that substantial justice should overreach technical procedural requirements, decided to condone the delay and admitted the appeal.

The taxpayer had challenged an addition of Rs. 22,18,713 made by the AO under Section 69A of the Income-tax Act, relating to cash deposits. He also argued that the assessment and appellate proceedings were conducted without providing a proper opportunity of being heard and that the first appellate authority had dismissed the appeal without examining the issues on merits.

The Tribunal noted that in the case, the CIT(A) had passed an ex parte order, as the taxpayer and his representative did not appear during the course of the appellate proceedings. However, the Tribunal noted that the CIT(A) has only dismissed the appeal on account of non-compliance and the grounds raised by the taxpayer were not discussed and decided on merits as provided under Section 250(6) of the Income-tax Act.

The Tribunal held that an appeal cannot be dismissed merely because the taxpayer did not appear. The appellate authority is required to pass a reasoned and speaking order after examining the facts and issues involved.

Accordingly, the ITAT set aside the order of the CIT(A) and sent the matter back to the appellate authority for a fresh (de novo) adjudication. The CIT(A) has been directed to decide the appeal on merits after giving a reasonable opportunity of hearing to both sides.

The Tribunal also directed the taxpayer to cooperate with the proceedings and appear before it on future hearings without any default.

The case has been remitted back for fresh consideration and the Tribunal has not gone into the merits of the addition of Rs. 22,18,713 or the other grounds taken by the taxpayer. Such issues will now be decided by the CIT(A).

As a result, the appeal was allowed for statistical purposes.